Reading 48: Market-Based Valuation: Price Multiples - LOS

答案和详解如下：

1.Which of the following valuation approaches is based on the rationale that stock values differ due to differences in the expected values of variables such as sales, earnings, or related growth rates?

A)   Method of comparables.

B)   Method of forecasted fundamentals.

C)   Free cash flow to equity.

D)   Free cash flow to the firm.

The correct answer was B)

The method of forecasted fundamentals is based on the rationale that stock values differ due to differences in the expected values of fundamentals such as sales, earnings, or related growth rates.

2.Which of the following statements about the method of comparables in price multiple valuation is TRUE? It:

A)   assumes that cash flows are related to fundamentals.

B)   does not focus on comparisons across stocks.

C)   values an asset relative to a benchmark value of the multiple.

D)   relates multiples to company fundamentals using a discounted cash flow (DCF) model.

The correct answer was C)

The method of comparables involves using a price multiple to evaluate whether an asset is valued properly relative to a benchmark value of the multiple. It makes no explicit assumptions about fundamentals, does not rely on a DCF model, and does involve comparisons across stocks.

3.Which of the following statements about the method of forecasted fundamentals in price multiple valuation is TRUE? It:

A)   values an asset relative to a benchmark value of the multiple.

B)   focuses on comparisons across stocks.

C)   relies on the Law of One Price.

D)   relates multiples to company fundamentals using a discounted cash flow (DCF) model.

The correct answer was D)

The method of forecasted fundamentals relates multiples to company fundamentals using a DCF method. It does not focus on comparisons across stocks or explicitly rely on the Law of One Price. Further, it does not typically focus on benchmarks.

4.P/E multiples are often computed using the average of the multiples of comparable firms, because:

A)   it is conceptually very straightforward.

B)   it is very easy to find comparable firms that have the same business mix and risk and growth profiles.

C)   the value of the multiple is not affected by including or excluding one or two firms.

D)   it provides the most accurate results.

The correct answer was A)

The use of comparable firms is quite common, because it is conceptually very straightforward. Also, it does not require the analyst to make specific assumptions regarding growth, risk, and other variables. But this can be a drawback as well, because the inclusion or exclusion of one or two firms can have a dramatic effect on the value of P/E. However, it is often difficult to find comparable firms, since even within the same industry different firms can have different business mixes and risk and growth profiles.

5.The value of a firm, calculated using the discounted cash flow (DCF) method, will be closest to the valuation using P/E multiples when P/E multiples are estimated using:

A)   fundamental data.

B)   historical P/E multiples.

C)   P/E multiples of comparable firms.

D)   multiple regressions on data from an entire cross-section of firms.

The correct answer was A)

In the DCF valuation method, an analyst makes specific assumptions about each variable, such as growth, risk, payout, etc. The valuation using P/E multiples will be closest to the one obtained using the DCF approach when fundamental data -- for growth, risk, payout, etc. -- is used to estimate P/E multiples.